Inventory Control Essay

Submitted By lavara31
Words: 497
Pages: 2

What type of inventory control system would you suggest to Jim Reed? Jim Reed is aware that his company inventory must serve its purpose of maximizing the profit. At the present time the approach is to lower the inventory and improving his service levels. The inventory reduction is to attack the methodology in two directions. (1) optimizing inventory levels and view the order fulfillment process (2) changing the way we currently process order fulfillment. A storewide sale of the inventory will eliminate overstock items. The overall goal is to sell inventory at full price, but reduce price is an option. The company advertisement skills have to benefit the immediate sale of the product at all cost. The company must generate cash and if all else fails donation to charitable organization will benefit tax but not help with immediate cash flow because the tax write-off and lower holding costs alone will make it worthwhile. What type of accounts receivable control would you suggest to Jim Reed? In the business meeting Jim Reed and Harold Holmes final outcome is the cash flow is crippling the business with need to reduce the inventory and stabilize the accounts receivable balances. After careful consideration Jim is seeking outsource counseling to help in reducing the inventory without sacrificing customer relationships and maintain good will. “A simple interest-only loan is suggested and secured with a UCC-1 lien, which is made against the value of the accounts receivable of the business. The loan proceeds are distributed to the business owner who invests them into either an annuity contract or life insurance policy. The bank will take additional security with a lien against the annuity or life insurance policy and protect the accounts receivable by effectively “equity stripping” the asset by way of the UCC-1 lien”. (2008, Adkisson) With this financial program it will create significantly more money for the business owner than if nothing were done. This will help the…